Heidrick & Struggles International (HSII) 8-K Heidrick & Struggles Reports Strong 2018 Third Quarter andYear-to-Date Results

Exhibit 99.1

FOR IMMEDIATE RELEASE

Heidrick & Struggles Reports Strong 2018 Third Quarter andYear-to-Date Results

Second consecutive quarter of record net revenue

• Record quarterly net revenue of $187.6 million, up 17.4% from $159.8 million in the 2017 third quarter, was driven by a combination of higher search confirmations, revenue per executive search, upticks, and record annualized productivity of $2.0 million per search consultant.

• Operating margin was 11.0% in the 2018 third quarter, the highest in 10 years, on operating income of $20.6 million, up 46.8% compared to the 2017 third quarter.

• Net income more than doubled to $16.5 million in the 2018 third quarter and diluted earnings per share (EPS) was $0.85 with an effective tax rate of 29.0% and a full-year projected tax rate in the low 30% range.

“We are very pleased to report another quarter of record net revenue, coupled with additional savings in general and administrative expenses, which led to a continued improvement in operating margin, net income and EPS. The third quarter andyear-to-date results reflect the hard work of our employees globally and the continued execution of our key 2018 initiatives — to grow our scale and impact with clients, collaborate across business lines to drive revenue, invest in the business to deliver a premium service experience to our clients, and improve profitability.”— Krishnan Rajagopalan, Heidrick & Struggles’ President and Chief Executive Officer

CHICAGO, October 29, 2018 — Heidrick & Struggles International, Inc. (Nasdaq: HSII), a premier provider of executive search, leadership assessment and development, organization and team effectiveness, and culture shaping services globally, today announced financial results for its third quarter ended September 30, 2018.

Third Quarter Results

Driven by strong results in Executive Search, consolidated net revenue (revenue before reimbursements) increased 17.4%, or $27.8 million, to a quarterly record of $187.6 million from $159.8 million in the 2017 third quarter. Excluding the impact of exchange rate fluctuations which negatively impacted results by $1.8 million, or 1.0%, consolidated net revenue increased 18.5% or $29.6 million.

Executive Search net revenue increased 19.4% year over year, or $27.9 million, to $172.1 million from $144.1 million in the 2017 third quarter. All three regions contributed to this growth with net revenue increasing 20.7% in the Americas, 10.2% in Europe and 28.5% in Asia Pacific. Every industry practice also contributed to year-over-year growth, with the largest increases in billings in Financial Services, up 23%, and Industrial, up 31%.

There were 346 Executive Search consultants at September 30, 2018 compared to 351 at September 30, 2017 and 349 at June 30, 2018. Productivity, as measured by annualized Executive Search net revenue per consultant, was a record $2.0 million in the 2018 third quarter compared to $1.6 million in the 2017 third quarter. The number of confirmed searches in the 2018 third quarter increased 14.3% compared to the 2017 third quarter, and the average revenue per executive search was $133,700 compared to $128,000 in the 2017 third quarter.

Heidrick Consulting net revenue decreased 1.0%, or $0.2 million, to $15.5 million from $15.7 million in the 2017 third quarter. The decline largely reflects the impact of the new revenue recognition accounting on enterprise license agreements, which increased deferred revenue thereby reducing net revenue in the quarter by approximately $0.9 million. There were 30 Heidrick Consulting Partners at September 30, 2018 compared to 27 at September 30, 2017 and 31 at June 30, 2018.

Consolidated salaries and employee benefits expense in the 2018 third quarter increased 23.4%, or $25.4 million,to $133.9 million from $108.5 million in the 2017 third quarter. Fixed compensation expense increased $9.3 million largely reflecting higher costs for talent acquisition and retention. Variable compensation expense increased $16.1 million, primarily reflecting higher bonus accruals for Executive Search consultant performance. Salaries and employee benefits expense was 71.4% of net revenue for the quarter compared to 67.9% in the 2017 third quarter.

General and administrative expenses declined 11.2%, or $4.2 million, to $33.1 million from$37.2 million in the 2017 third quarter. Savings were achieved in a number of expense categories, but lower internal travel expense, a reduction in the use of external third-party consultants, lower IT communications costs, and lower bad debt expense were the primary drivers of the decline in G&A expense. As a percentage of net revenue, general and administrative expenses were 17.6% compared to 23.3% in the 2017 third quarter.

Operating income in the 2018 third quarter increased 46.8%, or $6.6 million, to $20.6 million from $14.0 million in the 2017 third quarter. The operating margin (operating income as a percentage of net revenue) improved to 11.0% compared to operating margin of 8.8% in the same quarter of 2017. Adjusted EBITDA in the 2018 third quarter increased $8.5 million to $26.4 million from $18.0 million in the 2017 third quarter. The Adjusted EBITDA margin(Adjusted EBITDA as a percentage of net revenue) in the 2018 third quarter was 14.1% compared to 11.2% in the 2017 third quarter. The improvements in operating income and Adjusted EBITDA were primarily driven by the increase in revenue from Executive Search.

In the 2018 third quarter, net income more than doubled to $16.5 million and diluted earnings per share was $0.85 with an effective tax rate of 29.0% in the quarter and a full-year projected tax rate in the low 30% range. This compares to net income of $8.2 million in the 2017 third quarter and diluted earnings per share of $0.43, with an effective tax rate of 42.7%.

Net cash provided by operating activities in the 2018 third quarter was $84.2 million,compared to $50.2 million in the 2017 third quarter. Cash and cash equivalents at September 30, 2018 were $164.2 million compared to $207.5 million at December 31, 2017, and $105.7 million at September 30, 2017.

Nine Months Results

For the nine months ended September 30, 2018 consolidated net revenue of $530.7 million increased 17.4%, or $78.7 million, from $452.0 million in the first nine months of 2017. Excluding the impact of exchange rate fluctuations which positively impacted results by $6.5 million, or 1.2%, consolidated net revenue increased 16.0% or $72.2 million. The company’s adoption of ASC 606 on January 1, 2018, increased consolidated net revenue in the first nine months of 2018 by $1.3 million compared to the historical method of revenue recognition.

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Executive Search net revenue increased 20.2%, or $81.2 million, to $484.4 million from $403.1 million in the first nine months of 2017. Excluding the impact of exchange rate fluctuations which positively impacted results by $5.6 million, or 1.2%, consolidated net revenue increased $75.6 million or 18.8%. Net revenue increased 18.9% in the Americas, 22.0% in Europe (approximately 15.6% on a constant currency basis), and 22.3% in the Asia Pacific region (approximately 22.0% on a constant currency basis). All of the industry practices contributed to growth in the first nine months of 2018. Productivity was $1.8 million per executive search consultant for the first nine months of 2018 compared to $1.5 million in the first nine months of 2017. The number of executive searches confirmed in the first nine months of 2018 increased 13.7% and the average revenue per executive search was $122,800 compared to $116,300 for the same period in 2017.

Heidrick Consulting net revenue declined 5.2%, or $2.5 million, to $46.3 million, from $48.9 million in the first nine months of 2017. Excluding the impact of exchange rate fluctuations, Heidrick Consulting revenue declined 7.0% or $3.4 million. The year-over-year decline largely reflects the impact of new revenue recognition accounting on enterprise license agreements, which increased deferred revenue compared to prior quarters, thereby reducing net revenue by approximately $2.7 million.

Operating income increased to $52.2 million and the operating margin improved to 9.8%. This compares to an operating loss of $7.8 million for the first nine months of 2017, which reflected two unusual items. In the 2017 first quarter, the company reached a settlement with Her Majesty’s Revenue & Customs (“HMRC”) in the United Kingdom regarding HMRC’s challenge of the tax treatment of certain contributions made to Employee Benefits Trusts (“EBT”) between 2002 and 2008. This settlement resulted in $1.5 million of salaries & employee benefits expense. Also in the 2017 second quarter, the company recorded anon-cash impairment charge of $39.2 million to write off the carrying value of intangible assets and goodwill related to its Culture Shaping business.

Adjusted EBITDA⁽¹⁾for the first nine months of 2018 increased to $68.4 million and Adjusted EBITDA margin was 12.9%, compared to Adjusted EBITDA of $46.9 million and Adjusted EBITDA margin of 10.4% for the same period of 2017.

Net income for the first nine months of 2018 was $38.1 million and diluted earnings per share was $1.96, with an effective tax rate of 30.1%. Net loss for the first nine months of 2017 was $9.4 million and diluted loss per share was $0.50, with an effective tax rate of 8.7%.

New Credit Facility

Taking advantage of favorable market conditions to lower costs and extend the term of its credit facility, the company executed a new Credit Agreement on October 26, 2018 led by Bank of America Merrill Lynch and SunTrust Robinson Humphrey, Inc., supported further by HSBC Bank. This Agreement provides for a senior unsecured revolving credit facility in an aggregate amount of $175 million, with an optional increase up to $250 million in aggregate principal amount, subject to the lenders’ approval and provided the company is in compliance with certain conditions of the Agreement. Prior to this Agreement, the company had a $100 million revolving credit facility, with an optional increase up to $150 million. The new credit facility, expiring in October 2023, provides the company increased liquidity at a lower cost.

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2018 Outlook

The company is forecasting 2018 fourth quarter consolidated net revenue of between $170 million and $180 million. This forecast is based on the average currency rates in September 2018 and reflects, among other factors, management’s assumptions for the anticipated volume of new Executive Search confirmations, Heidrick Consulting assignments, the current backlog, consultant productivity, consultant retention, and the seasonality of its business.

Rajagopalan added, “Our outlook for the market demand for executive search and leadership advisory services continues to be positive. There will always bequarter-to-quarter variability that is difficult to predict given the nature of our business and global footprint, but we are on track to deliver a record year in net revenue and are well positioned to create shareholder value by executing on our 2018 initiatives.”

Impact of Adoption of ASC 606

On January 1, 2018, the company adopted ASC 606, Revenue from Contracts with Customers, and applied the modified retrospective method, which involves recognizing the cumulative effect of applying the guidance at the date of initial application with no restatement of the comparative periods presented. This adoption reduced consolidated net revenue in the 2018 third quarter by $0.1 million compared to the historical method of revenue recognition. For the first nine months of 2018, the adoption of ASC 606 increased revenue by $1.3 million. The new guidance primarily impacts the company’s revenue recognition methodology for executive search upticks and for enterprise licenses to use its culture shaping proprietary tools, referred to as enterprise agreements. The company now estimates uptick revenue and recognizes this revenue over the life of the executive search as opposed to recognition upon the placement of a candidate. Enterprise agreements are now recognized over a longer term due to certain renewal options included in the contract. The following is a summary of the impact on 2018 third quarter revenue by segment:

• Executive Search- The adoption of the new revenue recognition standard increased revenue in the 2018 third quarter by approximately $0.7 million, reflecting a $0.5 million reduction in the Americas, a $0.2 million increase in Europe, and a $1.1 million increase in Asia Pacific.

• Heidrick Consulting— The adoption of the new revenue recognition standard reduced enterprise revenue in the 2018 third quarter by approximately $0.9 million.

For the year ending December 31, 2018, the company anticipates that the change in revenue recognition will not be material to consolidated net revenue, subject to variability in the number, timing and value of Executive Search confirmations as well as enterprise license agreements.

Dividend

The Board of Directors has declared the third quarter cash dividend of $0.13 per share payable on November 23, 2018 to shareholders of record at the close of business on November 9, 2018.

Quarterly Conference Call

Executives of Heidrick & Struggles will host a conference call to review its 2018 third quarter financial results today, October 29, at 4:00 pm Central Time. Participants may access the company’s call and supporting slides through its website at www.heidrick.com. For those unable to participate on the live call, a webcast and copy of the slides will be archived atwww.heidrick.com and available for up to 30 days following the investor call.

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About Heidrick & Struggles International, Inc.

Heidrick & Struggles (Nasdaq: HSII) serves the senior-level talent and leadership needs of the world’s top organizations as a trusted advisor across executive search, leadership assessment and development, organization and team effectiveness, and culture shaping services. Heidrick & Struggles pioneered the profession of executive search 65 years ago. Today, the firm provides integrated leadership solutions to help our clients change the world, one leadership team at a time.^® www.heidrick.com

Non-GAAP Financial Measures

To supplement the financial results presented in accordance with generally accepted accounting principles in the United States (“GAAP”), Heidrick & Struggles presents certainnon-GAAP financial measures. A“non-GAAP financial measure” is defined as a numerical measure of a company’s financial performance that excludes or includes amounts different than the most directly comparable measure calculated and presented in accordance with GAAP in the statements of comprehensive income, balance sheets or statements of cash flow of the company. Pursuant to the requirements of Regulation G, this earnings release contains the most directly comparable GAAP financial measure to thenon-GAAP financial measure.

Thenon-GAAP financial measures used within this earnings release are Adjusted EBITDA and Adjusted EBITDA margin. A reconciliation of Adjusted EBITDA to Net Income is provided on the last schedule of this release.

• Adjusted EBITDArefers to earnings before interest, taxes, depreciation, intangible amortization, stock-based compensation expense, earnout accretion expense related to acquisitions, restructuring and impairment charges, and othernon-operating income (expense).

• Adjusted EBITDA margin refers to Adjusted EBITDA as a percentage of net revenue in the same period.

These measures are presented because management uses this information to monitor and evaluate financial results and trends. Management believes this information is also useful for investors.

Safe Harbor Statement

This press release contains forward-looking statements. The forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry in which we operate and management’s beliefs and assumptions. Forward-looking statements may be identified by the use of words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “projects,” “forecasts,” and similar expressions. Forward-looking statements are not guarantees of future performance and involve certain known and unknown risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from what is expressed, forecasted or implied in the forward-looking statements. Factors that may affect the outcome of the forward-looking statements include, among other things, leadership changes, our ability to attract, integrate, manage and retain qualified consultants and senior leaders; our ability to develop and maintain strong, long-term relationships with our clients; declines in the global economy and our ability to execute successfully through business cycles; the timing, speed or robustness of any future economic recovery; social or political instability in markets where we operate; the impact of the U.K. referendum to leave the European Union (Brexit); the impact of foreign currency exchange rate fluctuations; unfavorable tax law changes and tax authority rulings; price competition; the ability to forecast, on a quarterly basis, variable compensation accruals that ultimately are determined based on the achievement of annual results; our ability to utilize our tax losses; the timing of the establishment or reversal of valuation allowances on deferred tax assets; the mix of profit and loss by country; our reliance on information management systems; any impairment of our goodwill and other intangible assets; and the

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ability to align our cost structure and headcount with net revenue. For more information on the factors that could affect the outcome of forward-looking statements, refer to our Annual Report on Form10-K for the year ended December 31, 2017, under Risk Factors in Item 1A and our quarterly filings with the SEC. We caution the reader that the list of factors may not be exhaustive. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

###

Press Release Contacts:

H&S Investors & Analysts Contact:

Julie Creed - Vice President, Real Estate & Investor Relations

+1 312 496 1774, jcreed@heidrick.com

H&S Media Contact:

Nina Chang – Vice President, Corporate Communications

+1 212 551 1634, nchang@heidrick.com

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Heidrick & Struggles International, Inc.

Condensed Consolidated Statements of Comprehensive Income

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended September 30,						$ Change			% Change
	2018			2017
Revenue
Revenue before reimbursements (net revenue)	$	187,588		$	159,800		$	27,788			17.4	%
Reimbursements		4,753			4,665			88			1.9	%
Total revenue		192,341			164,465			27,876			16.9	%
Operating expenses
Salaries and employee benefits		133,933			108,546			25,387			23.4	%
General and administrative expenses		33,072			37,232			(4,160	)		(11.2	)%
Reimbursed expenses		4,753			4,665			88			1.9	%
Total operating expenses		171,758			150,443			21,315			14.2	%
Operating income		20,583			14,022			6,561			46.8	%
Non-operating income
Interest, net		259			94
Other, net		2,345			147
Netnon-operating income		2,604			241
Income before taxes		23,187			14,263
Provision for income taxes		6,718			6,092
Net income		16,469			8,171
Other comprehensive income (loss)		(881	)		1,619
Comprehensive income	$	15,588		$	9,790
Basic weighted average common shares outstanding		18,954			18,781
Diluted weighted average common shares outstanding		19,401			19,016
Basic net income per common share	$	0.87		$	0.44
Diluted net income per common share	$	0.85		$	0.43
Salaries and employee benefits as a % of net revenue		71.4	%		67.9	%
General and administrative expenses as a % of net revenue		17.6	%		23.3	%
Operating income as a percentage of net income		11.0	%		8.8	%

Heidrick & Struggles International, Inc.

Segment Information

(In thousands)

(Unaudited)

	Three Months Ended September 30,
	2018			2017			$ Change			% Change			2018 Margin*			2017 Margin*
Revenue
Executive Search
Americas	$	106,504		$	88,254		$	18,250			20.7	%
Europe		37,452			33,994			3,458			10.2	%
Asia Pacific		28,095			21,865			6,230			28.5	%
Total Executive Search		172,051			144,113			27,938			19.4	%
Heidrick Consulting		15,537			15,687			(150	)		(1.0	)%
Revenue before reimbursements (net revenue)		187,588			159,800			27,788			17.4	%
Reimbursements		4,753			4,665			88			1.9	%
Total revenue	$	192,341		$	164,465		$	27,876			16.9	%
Operating income (loss)
Executive Search
Americas	$	23,341		$	21,140		$	2,201			10.4	%		21.9	%		24.0	%
Europe		904			3,047			(2,143	)		(70.3	)%		2.4	%		9.0	%
Asia Pacific		6,414			369			6,045			NM			22.8	%		1.7	%
Total Executive Search		30,659			24,556			6,103			24.9	%		17.8	%		17.0	%
Heidrick Consulting		(1,761	)		(2,625	)		864			32.9	%		(11.3	)%		(16.7	)%
Total segments		28,898			21,931			6,967			31.8	%		15.4	%		13.7	%
Global Operations Support		(8,315	)		(7,909	)		(406	)		(5.1	)%		(4.4	)%		(4.9	)%
Total operating income	$	20,583		$	14,022		$	6,561			46.8	%		11.0	%		8.8	%

* Margin based on revenue before reimbursements (net revenue)

Heidrick & Struggles International, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands, except per share amounts)

(Unaudited)

	Nine Months Ended September 30,						$ Change			% Change
	2018			2017
Revenue
Revenue before reimbursements (net revenue)	$	530,718		$	452,020		$	78,698			17.4	%
Reimbursements		13,970			13,740			230			1.7	%
Total revenue		544,688			465,760			78,928			16.9	%
Operating expenses
Salaries and employee benefits		373,021			309,159			63,862			20.7	%
General and administrative expenses		105,532			111,454			(5,922	)		(5.3	)%
Impairment charges		—			39,158			(39,158	)		(100.0	)%
Reimbursed expenses		13,970			13,740			230			1.7	%
Total operating expenses		492,523			473,511			19,012			4.0	%
Operating income (loss)		52,165			(7,751	)		59,916			NM
Non-operating income (expense)
Interest, net		496			195
Other, net		1,849			(2,773	)
Netnon-operating income (expense)		2,345			(2,578	)
Income (loss) before taxes		54,510			(10,329	)
Provision for (benefit from) income taxes		16,410			(902	)
Net income (loss)		38,100			(9,427	)
Other comprehensive income (loss)		(3,107	)		7,637
Comprehensive income (loss)	$	34,993		$	(1,790	)
Basic weighted average common shares outstanding		18,905			18,720
Diluted weighted average common shares outstanding		19,444			18,720
Basic net income per common share	$	2.02		$	(0.50	)
Diluted net income per common share	$	1.96		$	(0.50	)
Salaries and employee benefits as a % of net revenue		70.3	%		68.4	%
General and administrative expenses as a % of net revenue		19.9	%		24.7	%
Operating income as a percentage of net income		9.8	%		(1.7	)%

Heidrick & Struggles International, Inc.

Segment Information

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2018			2017			$ Change			% Change			2018 Margin*			2017 Margin*
Revenue
Executive Search
Americas	$	295,499		$	248,442		$	47,057			18.9	%
Europe		110,419			90,534			19,885			22.0	%
Asia Pacific		78,460			64,162			14,298			22.3	%
Total Executive Search		484,378			403,138			81,240			20.2	%
Heidrick Consulting		46,340			48,882			(2,542	)		(5.2	)%
Revenue before reimbursements (net revenue)		530,718			452,020			78,698			17.4	%
Reimbursements		13,970			13,740			230			1.7	%
Total revenue	$	544,688		$	465,760		$	78,928			16.9	%
Operating income (loss)
Executive Search
Americas	$	69,988		$	60,958		$	9,030			14.8	%		23.7	%		24.5	%
Europe		6,453			4,207			2,246			53.4	%		5.8	%		4.6	%
Asia Pacific		13,608			3,966			9,642			243.1	%		17.3	%		6.2	%
Total Executive Search		90,049			69,131			20,918			30.3	%		18.6	%		17.1	%
Heidrick Consulting		(10,988	)		(49,849	)		38,861			78.0	%		(23.7	)%		(102.0	)%
Total segments		79,061			19,282			59,779			310.0	%		14.9	%		4.3	%
Global Operations Support		(26,896	)		(27,033	)		137			0.5	%		(5.1	)%		(6.0	)%
Total operating income (loss)	$	52,165		$	(7,751	)	$	59,916			773.0	%		9.8	%		(1.7	)%

* Margin based on revenue before reimbursements (net revenue)

Heidrick & Struggles International, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

	September 30, 2018		December 31, 2017
	(Unaudited)
Current assets
Cash and cash equivalents	$	164,216	$	207,534
Accounts receivable, net		158,107		98,700
Prepaid expenses		25,083		22,003
Other current assets		29,783		11,620
Income taxes recoverable		5,763		3,933
Total current assets		382,952		343,790
Non-current assets
Property and equipment, net		35,491		39,514
Assets designated for retirement and pension plans		16,554		17,130
Investments		21,013		21,319
Othernon-current assets		19,546		8,999
Goodwill		122,445		118,892
Other intangible assets, net		2,535		2,158
Deferred income taxes		32,320		35,402
Totalnon-current assets		249,904		243,414
Total assets	$	632,856	$	587,204
Current liabilities
Accounts payable	$	8,979	$	9,824
Accrued salaries and employee benefits		177,930		177,426
Deferred revenue, net		42,870		31,272
Other current liabilities		35,127		40,346
Income taxes payable		7,866		6,924
Total current liabilities		272,772		265,792
Non-current liabilities
Accrued salaries and employee benefits		40,946		40,308
Retirement and pension plans		43,536		44,802
Othernon-current liabilities		21,769		23,597
Totalnon-current liabilities		106,251		108,707
Stockholders’ equity		253,833		212,705
Total liabilities and stockholders’ equity	$	632,856	$	587,204

Heidrick & Struggles International, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Three Months Ended September 30,
	2018			2017
Cash flows - operating activities
Net income	$	16,469		$	8,171
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		3,065			3,704
Deferred income taxes		(91	)		(17	)
Stock-based compensation expense		2,911			199
Accretion expense related to earnout payments		316			211
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable		(4,660	)		(4,087	)
Accounts payable		1,036			(14	)
Accrued expenses		63,950			42,515
Restructuring accrual		(1,948	)		—
Deferred revenue		2,811			2,727
Income taxes payable, net		1,063			(2,062	)
Retirement and pension assets and liabilities		(1,140	)		(94	)
Prepaid expenses		2,463			(280	)
Other assets and liabilities, net		(2,070	)		(762	)
Net cash provided by operating activities		84,175			50,211
Cash flows - investing activities
Acquisition of business		42			(250	)
Capital expenditures		(2,391	)		(2,718	)
Purchases of available for sale investments		(155	)		(154	)
Proceeds from sale of available for sale investments		1,326			897
Net cash used in investing activities		(1,178	)		(2,225	)
Cash flows - financing activities
Cash dividends paid		(2,531	)		(2,517	)
Acquisition earnout payments		—			(60	)
Net cash used by financing activities		(2,531	)		(2,577	)
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash		(2,084	)		2,146
Net increase in cash, cash equivalents, and restricted cash		78,382			47,555
Cash, cash equivalents, and restricted cash at beginning of period		86,432			58,783
Cash, cash equivalents, and restricted cash at end of period	$	164,814		$	106,338

Heidrick & Struggles International, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2018			2017
Cash flows - operating activities
Net income (loss)	$	38,100		$	(9,427	)
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		9,558			11,270
Deferred income taxes		(438	)		(15,340	)
Stock-based compensation expense		6,763			3,915
Accretion expense related to earnout payments		963			836
Impairment charges		—			39,158
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable		(60,057	)		(32,603	)
Accounts payable		(761	)		49
Accrued expenses		3,834			(38,043	)
Restructuring accrual		(10,833	)		—
Deferred revenue		185			6,061
Income taxes payable, net		(2,003	)		(44	)
Retirement and pension assets and liabilities		(1,019	)		2,798
Prepaid expenses		(3,416	)		(1,631	)
Other assets and liabilities, net		(3,761	)		(3,000	)
Net cash used in operating activities		(22,885	)		(36,001	)
Cash flows - investing activities
Acquisition of business		(3,119	)		(364	)
Capital expenditures		(4,939	)		(13,161	)
Purchases of available for sale investments		(2,046	)		(2,117	)
Proceeds from sale of available for sale investments		2,890			1,271
Net cash used in investing activities		(7,214	)		(14,371	)
Cash flows - financing activities
Proceeds from line of credit		20,000			40,000
Payments on line of credit		(20,000	)		(40,000	)
Cash dividends paid		(7,573	)		(7,676	)
Payment of employee tax withholdings on equity transactions		(2,234	)		(2,392	)
Acquisition earnout payments		—			(4,557	)
Net cash used by financing activities		(9,807	)		(14,625	)
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash		(3,442	)		5,766
Net decrease in cash, cash equivalents, and restricted cash		(43,348	)		(59,231	)
Cash, cash equivalents, and restricted cash at beginning of period		208,162			165,569
Cash, cash equivalents, and restricted cash at end of period	$	164,814		$	106,338

Heidrick & Struggles International, Inc.

Reconciliation of Net Income and Operating Income (Loss) to Adjusted EBITDA(Non-GAAP)

(In thousands)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Revenue before reimbursements (net revenue)	$	187,588		$	159,800		$	530,718		$	452,020
Net income (loss)		16,469			8,171			38,100			(9,427	)
Interest, net		(259	)		(94	)		(496	)		(195	)
Other, net		(2,345	)		(147	)		(1,849	)		2,773
Provision for (benefit from) income taxes		6,718			6,092			16,410			(902	)
Operating income (loss)		20,583			14,022			52,165			(7,751	)
Adjustments
Salaries and employee benefits
Stock-based compensation expense		2,464			199			5,755			3,577
General and administrative expenses
Depreciation		2,709			2,833			8,337			7,379
Intangible amortization		355			871			1,220			3,891
Earnout accretion		316			26			963			652
Impairment charges		—			—			—			39,158
Total adjustments		5,844			3,929			16,275			54,657
Adjusted EBITDA	$	26,427		$	17,951		$	68,440		$	46,906
Adjusted EBITDA Margin		14.1	%		11.2	%		12.9	%		10.4	%